Evaluating China’s Drive for Budget Transparency

Over the past couple of weeks, a number of powerful Chinese government ministries have done something new: They told the world just how much taxpayer money they will spend this year. Their initiative comes as increasing numbers of Chinese citizens push their government to disclose more about how it spends the public’s money.

The Ministry of Finance, appropriately enough, set an example by publishing its own budget for 2010. It breaks down its spending by broad categories: public services (the majority), foreign affairs, education, housing.

Previously, the ministry had published figures for overall government spending in its annual budget presentation to the legislature, and provided some details on broad categories of spending like health care and defense. But a breakdown of the money spent by each individual ministry has never been available before.

Advertisement

It’s a step forward, certainly, but how does what China is now doing stack up against other governments?

“We see the Chinese government’s posting of this information as a very positive step toward more transparent and accountable budget practices, but there are some very specific further steps it needs to take to conform with international good practice and to enable meaningful participation and oversight from Chinese citizens,” the IBP told us.

The first issue the IBP highlights is that these budgets are being posted several months into the year, and well after the spending they describe has become a fait accompli. “These budgets were only made available after the 2010 budget law had been enacted by the annual National People’s Congress. In order to provide the public with opportunities to contribute and participate meaningfully in the budget decision-making process, these ministry budgets should have been posted online during the budget formulation stage,” the IBP said.

China’s departmental budgets also aren’t particularly detailed: Each is only about a page long, and breaks up revenue and expenditure into a half-dozen or so broad categories. “More disaggregated and detailed information is needed to determine whether the budgets conform with policy goals and to allow for analysis of the allocation of resources among sectors,” the IBP said. As an example, it points to the budget for South Africa’s Department of Science and Technology (PDF here), which runs to 32 pages.

It’s also not particularly easy to find ministerial budget information in China. While the different ministries each published their own budgets on their own Web sites, there is still no coherent central breakdown of how overall government spending is allocated to the different ministries. The IBP points to the example of India’s Ministry of Finance, which makes the budget of every individual ministry and department available on its own Web site.

Public reaction in China to the initiative has been mixed so far. The new transparency has been generally welcomed, but has done little to soothe suspicions that government officials often use public money to build themselves nice offices and buy new Audis.

The Yangcheng Evening News ran a story about the ministerial budgets that, while welcoming the initiative, called it an example of “selective disclosure.” The Ministry of Land and Resources’ finance director, Lai Wensheng, acknowledged that the disclosures probably fell short of expectations, according to a China Daily report. “This is the first time ministries have made public their budgets and it is usual that it is not exactly what the public expected. We will make more detailed budgets to the public step by step,” he was quoted as saying.

About China Real Time Report

China Real Time Report is a vital resource for an expanding global community trying to keep up with a country changing minute by minute. The site offers quick insight and sharp analysis from the wide network of Dow Jones reporters across Greater China, including Dow Jones Newswires’ specialists and The Wall Street Journal’s award-winning team. It also draws on the insights of commentators close to the hot topic of the day in law, policy, economics and culture. Its editors can be reached at chinarealtime@wsj.com.